7 ms·

Very difficult to change because, in the "Pax Neoliberalia" world we live in, profits are Sacrosanct - and the higher the capital concentration, the holier so.

Very difficult to change because, in the "Pax Neoliberalia" world we live in, profits are Sacrosanct - and the higher the capital concentration, the holier so. But some straightforward fixes: 1. Flood the market with affordable state housing, Austria-style - with the bonus of building new, boosting the national economy. 2. Create very progressive (rapidly rising) taxes based on property value - making untenable the current practice of parking money and profit by simply buying & holding empty flats and the like. 3. Raise salaries - currently portuguese salaries, and their weight on GDP, rank the lowest in the EU. (and no, it won't create an inflation spiral: the current inflation spike is, first and foremost, the result of a supply shock, price-gouging and speculative/cartel practices - corporate profits being at a record high is proof of that) Unfortunately, incentives are heavily stacked on leaving things as they are, as the ruling class is mostly made up of the landlord class, and, is not sensitive to (sometimes even not aware of) the struggles of assetless commoners that only earn income from their (low) salaried labor. Or, even worse, stands to lose their current large gains on capital/assets if this is fixed - and most portuguese media outlets trumpet their - private - master's voice and interests. Additionally, just leaving things as they are, also scores brownie points with the EU by making the Government (even if "center-left") appear "frugal". And PM Costa has personal ambitions for future EU high office. (...who will be the next head of the European Commission or the European Council?)

jollybean 4y ago
Well #1 is not 'straightfoward' fixes at all. Massive Real Estate buildouts are 'gigantic' industrial projects. A 'straight forward fix' is to ban foreign ownership of homes and AirBnB. Poof. Now, I wouldn't support that, but it would be 'straight forward'. #2 is reasonable. #3 is a big glib tough. "Hey, everyone should just get a raise!", if it were only that easy!
- DrNosferatu 4y ago
  1. "banning foreign ownership" would result in Portugalexit at best, perhaps a Zairization of Portugal, or even worse - no thanks. What's wrong with large industrial projects? It's exactly what we need at this moment - in fact, both Portugal and EU-scale. This would cost a small fraction of the Quantitative Easing program from the European Central Bank. (and these Massive Real Estate buildouts must include the lessons in Urbanism learned from past such projects) 2. (y) 3. State sector raises salaries, private sector is forced to follow. Just raising minimum wage is positive, but not enough. This tends to compress people to the bottom salary tier and promote even more brain drain.
  - jollybean 4y ago
    Large industrial projects are gigantic efforts that involve billions of dollars and years/decades to take effect, massive capital requirements. And risk. "State sector raises salaries, private sector is forced to follow." ... my god man, no, that's not how it works. More like: "Already inefficient state bureaucracies raise salaries, attracting workers from private sector who cannot afford to pay higher wages, requiring massive budgetary increase from government i.e. 'more taxes' just as economy goes into tailspin due to private sector layoffs. Probably the EU needs to re-think the fact that it's designed to send all young workers to Germany or at least out of Portugual/Spain/S. Italy and Greece and leave them as octegenarian tourist centres with illegal Turkish workers doing the actual work. Either 1) the EU starts massive transfer payments or 2) get rid of the Euro and have some limits on mobility, or it will just limp along. #1 might require political and fiscal integration which would probably just exasperate the problem. In the short term, they should probably raise taxes on foreign home ownership.
    - DrNosferatu 4y ago
      Large industrial projects brought most of the civilization advances we enjoy today: What were then Concorde, the US Interstate Highway System, LHC, Hoover Dam and the Apollo Program? But yes, Europe needs a genuine Hamiltonian Moment (share the debt burden) and also a genuine New Deal, instead of the current beggar-thy-neighbor EU order where Germany & friends benefit all.
  - stjohnswarts 4y ago
    (1). why not just make it painful to be a foreigner there. Raise taxes on rent/property if you're foreign by 3-4x (or whatever makes sense after an analysis of building new housing from foreigner tax dollars). If you don't want to scare off the ones already there then make it not retroactive. People like to make these situations tougher than they need to be. Mostly it's impossible because politicians are paid off by the 1% (foreign and domestic). The Portuguese have a right to enjoy their country without foreigners coming in and buying it off and pushing them to the edge of poverty. Globalism has got us in a tenuous situation in the West depending completely on the likes of China for our style of living. I can understand the Portuguese being angry with the situation.
- Tiktaalik 4y ago
  > Poof This has pretty much already been done in Vancouver, which has layers of Foreign Buyer Taxes, Speculation Taxes, Empty Home Taxes and strict Airbnb regulation. It absolutely did not make the problem go 'poof.' All these things were well worth doing and helped in various ways, but it remains that the core underlying problem is that there's not enough homes for everyone and scarcity ensures high rents and high prices. The dull solution is that a hell of a lot of homes need to be built.
  - jollybean 4y ago
    It has not been done in earnest in Vancouver. There's a 15 point 'one time' fee but it likely should be more, and/or an ongoing assessment i.e. higher annual taxes. Moreover, Canada gives away citizenship like candy and families have their kids live there. AirBnB is still running strong as well, which should be much more heavily taxed.
    - Tiktaalik 4y ago
      The government still keeps track of the amount of foreign buyers. It has plunged. It's likely that if it was a still a problem people would be doing something more but it's marginal at this point. The biggest impacts have already happened. We had developers building hyper luxury condos explicitly marketed to an asian audience and overnight with the foreign buyer tax everyone stopped making those and the same developers have pivoted to building purpose built rental for locals. The taxes worked. There's still a housing crisis.
      - deleted 4y ago
        [deleted]
  - mistermann 4y ago
    There's been nothing even remotely close to a ban, and it's highly uncertain the degree to which the new rules are even enforced. As with most things, Canadians are expected to Trust The Experts....and trust them they do!
WalterBright 4y ago
Inflation is not the result of profits, gouging, etc. It's the result of funding the deficit by running the printing press. (Or the modern equivalent, creating debt backed by nothing.) The proof is the observation that endemic inflation only happens in countries with fiat money systems.
- sofixa 4y ago
  I'm not sure you deserve engaging, but I'll give it a try. So you're just going to ignore a war involving two of the biggest exporters of some of the main raw materials we have (foodstuffs and energy) on the planet and associated supply problems on crucial things? Not to mention a pandemic that wrecked havoc on supply lines. None of that matters, your theory goes, it's purely a monetary phenomenon, because only countries with fiat money systems are impacted. Could you share some countries with alternative money systems that aren't impacted?
  - WalterBright 4y ago
    If it was not caused by fiat money, I'd expect to see corresponding periods of deflation. Inflation is a sustained increase in the general price level. It is not a temporary spike from the fluctuations in supply&demand of goods and services. Another way to understand it is to consider, what happens if the price of gas rises? Does that automatically put more money in your pocket to pay for it? Nope. You just have less money to spend on other things. But inflation (with a lag period) does put more money in your pocket. > Could you share some countries with alternative money systems that aren't impacted? Modern countries have all gone fiat. But we can look at the US from 1800-1914, which was not fiat money. There was zero net inflation in that period, while we've had endemic inflation ever since (aside from a brief period of deflation during the Depression). > I'm not sure you deserve engaging What I wrote is not the general opinion, though it is the opinion of economists. At least you were willing to talk about it, which is nice.
  - spaceman_2020 4y ago
    Inflation isn’t terribly bad in countries that didn’t print wild amounts of money. Like in India, inflation is almost back in control, and we didn’t print much money. Same in China. I haven’t run the numbers but if you were to chart inflation vs the money printing done by an economy, you’d likely find a positive correlation.
ido 4y ago
I haven't seen number 1 actually "fix" Vienna's rental market? I mean it's not as crazy as other places, but I moved to Vienna in 2005 (since moved out) and it used to be a lot more affordable to rent in than today (even adjusting for inflation). So it's not that it's completely ineffective but it's not on it's own enough.
- TulliusCicero 4y ago
  How much new housing have they been adding YoY? When people suggest that adding more new housing, either public or private, doesn't work, this is usually left out: how much housing actually was being added?
andreilys 4y ago
Yes I’m sure inflation has everything to do with price gouging and nothing to do with the trillions of dollars printed by the Fed. Because of course, money printer go brrr with no repercussions right?
- Tade0 4y ago
  Essentially. Looking at Switzerland, which printed a lot of money in the past years but still has low inflation and had mostly deflation over the same period, there isn't a simple connection between money supply and inflation. Inflation isn't merely a monetary issue.
golergka 4y ago
Why don't you include the most obvious, free market, capitalist solution of all: just let people build more housing? It won't be affordable at first, of course, but as you flood the market with new high-rise apartments, the price will inevitably plummet.

jollybean 4y ago

Well #1 is not 'straightfoward' fixes at all. Massive Real Estate buildouts are 'gigantic' industrial projects. A 'straight forward fix' is to ban foreign ownership of homes and AirBnB. Poof. Now, I wouldn't support that, but it would be 'straight forward'. #2 is reasonable. #3 is a big glib tough. "Hey, everyone should just get a raise!", if it were only that easy!

DrNosferatu 4y ago
1. "banning foreign ownership" would result in Portugalexit at best, perhaps a Zairization of Portugal, or even worse - no thanks. What's wrong with large industrial projects? It's exactly what we need at this moment - in fact, both Portugal and EU-scale. This would cost a small fraction of the Quantitative Easing program from the European Central Bank. (and these Massive Real Estate buildouts must include the lessons in Urbanism learned from past such projects) 2. (y) 3. State sector raises salaries, private sector is forced to follow. Just raising minimum wage is positive, but not enough. This tends to compress people to the bottom salary tier and promote even more brain drain.
- jollybean 4y ago
  Large industrial projects are gigantic efforts that involve billions of dollars and years/decades to take effect, massive capital requirements. And risk. "State sector raises salaries, private sector is forced to follow." ... my god man, no, that's not how it works. More like: "Already inefficient state bureaucracies raise salaries, attracting workers from private sector who cannot afford to pay higher wages, requiring massive budgetary increase from government i.e. 'more taxes' just as economy goes into tailspin due to private sector layoffs. Probably the EU needs to re-think the fact that it's designed to send all young workers to Germany or at least out of Portugual/Spain/S. Italy and Greece and leave them as octegenarian tourist centres with illegal Turkish workers doing the actual work. Either 1) the EU starts massive transfer payments or 2) get rid of the Euro and have some limits on mobility, or it will just limp along. #1 might require political and fiscal integration which would probably just exasperate the problem. In the short term, they should probably raise taxes on foreign home ownership.
  - DrNosferatu 4y ago
    Large industrial projects brought most of the civilization advances we enjoy today: What were then Concorde, the US Interstate Highway System, LHC, Hoover Dam and the Apollo Program? But yes, Europe needs a genuine Hamiltonian Moment (share the debt burden) and also a genuine New Deal, instead of the current beggar-thy-neighbor EU order where Germany & friends benefit all.
- stjohnswarts 4y ago
  (1). why not just make it painful to be a foreigner there. Raise taxes on rent/property if you're foreign by 3-4x (or whatever makes sense after an analysis of building new housing from foreigner tax dollars). If you don't want to scare off the ones already there then make it not retroactive. People like to make these situations tougher than they need to be. Mostly it's impossible because politicians are paid off by the 1% (foreign and domestic). The Portuguese have a right to enjoy their country without foreigners coming in and buying it off and pushing them to the edge of poverty. Globalism has got us in a tenuous situation in the West depending completely on the likes of China for our style of living. I can understand the Portuguese being angry with the situation.
Tiktaalik 4y ago
> Poof This has pretty much already been done in Vancouver, which has layers of Foreign Buyer Taxes, Speculation Taxes, Empty Home Taxes and strict Airbnb regulation. It absolutely did not make the problem go 'poof.' All these things were well worth doing and helped in various ways, but it remains that the core underlying problem is that there's not enough homes for everyone and scarcity ensures high rents and high prices. The dull solution is that a hell of a lot of homes need to be built.
- jollybean 4y ago
  It has not been done in earnest in Vancouver. There's a 15 point 'one time' fee but it likely should be more, and/or an ongoing assessment i.e. higher annual taxes. Moreover, Canada gives away citizenship like candy and families have their kids live there. AirBnB is still running strong as well, which should be much more heavily taxed.
  - Tiktaalik 4y ago
    The government still keeps track of the amount of foreign buyers. It has plunged. It's likely that if it was a still a problem people would be doing something more but it's marginal at this point. The biggest impacts have already happened. We had developers building hyper luxury condos explicitly marketed to an asian audience and overnight with the foreign buyer tax everyone stopped making those and the same developers have pivoted to building purpose built rental for locals. The taxes worked. There's still a housing crisis.
    - deleted 4y ago
      [deleted]
- mistermann 4y ago
  There's been nothing even remotely close to a ban, and it's highly uncertain the degree to which the new rules are even enforced. As with most things, Canadians are expected to Trust The Experts....and trust them they do!

WalterBright 4y ago

Inflation is not the result of profits, gouging, etc. It's the result of funding the deficit by running the printing press. (Or the modern equivalent, creating debt backed by nothing.) The proof is the observation that endemic inflation only happens in countries with fiat money systems.

sofixa 4y ago
I'm not sure you deserve engaging, but I'll give it a try. So you're just going to ignore a war involving two of the biggest exporters of some of the main raw materials we have (foodstuffs and energy) on the planet and associated supply problems on crucial things? Not to mention a pandemic that wrecked havoc on supply lines. None of that matters, your theory goes, it's purely a monetary phenomenon, because only countries with fiat money systems are impacted. Could you share some countries with alternative money systems that aren't impacted?
- WalterBright 4y ago
  If it was not caused by fiat money, I'd expect to see corresponding periods of deflation. Inflation is a sustained increase in the general price level. It is not a temporary spike from the fluctuations in supply&demand of goods and services. Another way to understand it is to consider, what happens if the price of gas rises? Does that automatically put more money in your pocket to pay for it? Nope. You just have less money to spend on other things. But inflation (with a lag period) does put more money in your pocket. > Could you share some countries with alternative money systems that aren't impacted? Modern countries have all gone fiat. But we can look at the US from 1800-1914, which was not fiat money. There was zero net inflation in that period, while we've had endemic inflation ever since (aside from a brief period of deflation during the Depression). > I'm not sure you deserve engaging What I wrote is not the general opinion, though it is the opinion of economists. At least you were willing to talk about it, which is nice.
- spaceman_2020 4y ago
  Inflation isn’t terribly bad in countries that didn’t print wild amounts of money. Like in India, inflation is almost back in control, and we didn’t print much money. Same in China. I haven’t run the numbers but if you were to chart inflation vs the money printing done by an economy, you’d likely find a positive correlation.

ido 4y ago

I haven't seen number 1 actually "fix" Vienna's rental market? I mean it's not as crazy as other places, but I moved to Vienna in 2005 (since moved out) and it used to be a lot more affordable to rent in than today (even adjusting for inflation). So it's not that it's completely ineffective but it's not on it's own enough.

TulliusCicero 4y ago
How much new housing have they been adding YoY? When people suggest that adding more new housing, either public or private, doesn't work, this is usually left out: how much housing actually was being added?

andreilys 4y ago

Yes I’m sure inflation has everything to do with price gouging and nothing to do with the trillions of dollars printed by the Fed. Because of course, money printer go brrr with no repercussions right?

Tade0 4y ago
Essentially. Looking at Switzerland, which printed a lot of money in the past years but still has low inflation and had mostly deflation over the same period, there isn't a simple connection between money supply and inflation. Inflation isn't merely a monetary issue.

golergka 4y ago

Why don't you include the most obvious, free market, capitalist solution of all: just let people build more housing? It won't be affordable at first, of course, but as you flood the market with new high-rise apartments, the price will inevitably plummet.